HONG KONG—Factory activity faltered across Asia in August, with a resurgence in Covid-19 infections adding to global supply-chain disruptions and confirming fears of a slowdown in the region’s economic recovery.
Gauges of manufacturing activity plummeted across major Asian economies, in large part because virus lockdowns, port congestion and higher input costs hampered production. There were also signs that global demand for some Asian goods has been leveling off, as consumers rein in spending in the West.
Factories in Vietnam have been forced to shut or reduce their workforces during the country’s deadliest Covid-19 wave. In Malaysia, most manufacturers have been told to reduce capacity unless they have vaccinated at least 80% of factory workers. China partly shut down the world’s third-busiest port last month, though it has since reopened.
In China, a closely followed private gauge of factory activity—the Caixin China purchasing managers index, which primarily measures smaller manufacturers—contracted in August for the first time since the start of the country’s economic recovery in April 2020. It dropped to 49.2 in August from 50.3 in July. Readings below 50 signal contraction.
The weaker-than-expected results came on the heels of another disappointing report earlier in the week, when an official government gauge of the overall manufacturing sector slipped to 50.1 in August, its lowest level in 18 months.
